A recent press release from Iron Mountain Inc. (IRM) confirmed that the company successfully completed a public offer of $550 million, 8-3/8% of Senior Subordinated notes, due for redemption in 2021. The discounted offer price of the subordinated notes was 99.625% of the par value.
The amount raised from this offer will be utilized for redemption of $448 million of aggregate outstanding 8-5/8% Senior Subordinated Notes due 2013. The additional amount raised from this issue will be used for making possible repayments of other debts, fund future acquisitions and take care of other business needs.
Historically, the company has had a high debt component in its balance sheet and also reported substantial interest outlay. Until the second quarter of 2009, Iron Mountain had a significant amount of debt, which made up around 50% of the total balance sheet, yielding a debt-equity ratio of 1.65. While the debt could help the company fund its growth, the substantial interest payments will continue to have a negative impact on its bottom-line.
Iron Mountain reported good second quarter results, with EPS exceeding the Zacks Consensus Estimate.  The company also expects an encouraging second half. We are encouraged by the continuing strength in the information protection and storage services business, which has driven steady profits for Iron Mountain. On the other hand, we are a tad concerned about the high level of debt and believe that it needs to rationalize its debt level to attain sustainable growth.
Read the full analyst report on “IRM”
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